What a bummer. Before you blame the gruff IAD ticket agent (who clearly needs an education of baggage policies), if yy had a seat on the outbound, my guess is that yy's boarding pass didn't get properly scanned at the gate which will cause US to automatically cancel the ticket.

I think a string of apologies from FAs, reasonably compassionate attention in-flight, a refund and a credit are the appropriate compensation for your inconvenience. I'm glad that they offered at least that much, and I'm sorry to hear that they've botched the refund.

I'm not sure how many times you've been back and forth with them to get the refund applied correctly, but I'd say after 2nd (or if really patient 3rd) attempt at getting the refund correctly applied that I would send a sternly worded and BRIEF email requesting that the issue be appropriately escalated to get the refund corrected within 72 hours or your next communication will be a CC: to the executive offices on a complaint to the DOT.